New York, Jan 28, 2026, 17:16 ET — After-hours
- IBM shares jumped roughly 8% in after-hours trading, delivering an early boost to the earnings season.
- The company projected over 5% constant-currency revenue growth in 2026, along with an increase in free cash flow.
- Investors are eyeing Red Hat’s momentum alongside U.S. federal spending, as management prepares for a 5 p.m. ET call.
IBM shares jumped in after-hours trading Wednesday following the release of its fourth-quarter results. At 5:00 p.m. ET, the stock stood at $317, marking a 7.76% gain from the regular session close, with prices swinging between $324.20 and $294.09 during extended hours.
This reaction carries weight since IBM offers an early glimpse into enterprise tech demand during a quarter when Wall Street seeks to determine if corporate AI spending is actually driving billings and cash flow, rather than just inflating budgets.
IBM reported a 12% jump in fourth-quarter revenue, hitting $19.7 billion, with adjusted earnings at $4.52 per share. CEO Arvind Krishna highlighted that the generative-AI “book of business” now tops $12.5 billion. He said, “We enter 2026 with momentum,” backed by IBM’s forecast of over 5% revenue growth for 2026 in constant currency, which excludes exchange-rate effects. The company also expects roughly $1 billion more in free cash flow—cash remaining after capital expenditures—and announced a quarterly dividend of $1.68 per share. IBM Newsroom
Investors found a few weak spots. Red Hat, IBM’s hybrid-cloud arm, posted 10% growth this quarter, down from 14% last quarter. Meanwhile, the consulting segment slightly missed expectations, according to LSEG data. CFO Jim Kavanaugh told Reuters that a U.S. government shutdown late in 2025 shaved “a couple points” off Red Hat’s growth. The federal government accounts for roughly 15% of hybrid-cloud bookings, and another partial shutdown is looming this week. Reuters
IBM is pushing deals to expand its software stack aimed at managing AI in large enterprises. In December, it agreed to buy data-streaming company Confluent for $31 per share, valuing the deal at $11 billion. The acquisition is expected to wrap up by mid-2026. Confluent works with major players like AWS, Google Cloud, Microsoft, and Snowflake. IBM CEO Krishna described the combined product as a “smart data platform” for enterprise IT. Confluent CEO Jay Kreps said teaming up with IBM could speed up their growth plans. IBM Newsroom
The update came following a quiet day for the wider market. The S&P 500 closed almost flat after the Federal Reserve held rates steady at 3.5%–3.75%, with the index touching 7,000 briefly earlier in the session. “Whether you were bullish or bearish going into the press conference you walked away feeling about the same,” said Michael James, an equity sales trader at Rosenblatt Securities. Reuters
For IBM, the focus now shifts from headline numbers to the details: software demand, AI-driven contracts, and if Red Hat plus consulting can hold steady amid potential federal budget cuts.
IBM is set to hold its earnings call at 5:00 p.m. ET, with the webcast available on its investor website — the stock’s after-hours moves will face a fresh test when markets reopen Thursday.
